Oracle Revamps Business Model Using Internet To Share Data

SAN JOSE, Calif. — "We can revolutionize the way you run your business."

That was the pitch software giant Oracle Corp. used five years ago to sell its data-management and business-planning software to large companies around the world.

Today, the Redwood Shores, Calif.-based company is singing the same tune, promising its software can save companies loads of money as employees communicate better and spend less time on paperwork and more time chasing sales leads or designing new products.

What makes today's slogan different from those of the past?

The Internet, of course.

"We thought the Internet was the most astonishing transformation, as far as business was concerned, since James Watt, with the steam-powered engine, ushered in the industrial age," said Larry Ellison, Oracle's outspoken and flamboyant chairman.

The idea is simple: Put Oracle's business software--for everything from sales management to inventory tracking--on a few powerful computer servers running its database software. By centralizing and organizing masses of data, all employees can get the same information through a Web browser from anywhere at any time. The result will be a remarkable transformation from bloated businesses to sleek, efficient enterprises, the company contends.

Sounds good, but Oracle knew that it would be tough to sell its new vision to business leaders who already resented the constantly escalating cost of new technology.

Indeed, the last thing companies want to do is throw perfectly functional high-tech equipment out the window to spend more money on new systems.

And many remember that not too long ago, Oracle pushed the same business software for client/server networks--groups of desktop computers connected to one computer server inside a company. The problem with those networks, the standard in businesses today, is that a company's separate departments would have separate servers that were unable to communicate with each other.

So the world's second-largest software maker decided to become its own poster child.

About a year ago, Oracle began an overhaul of its operations, putting all of its software on a single network so that a sales person in Tokyo, for example, could get the same information at any time as a human resources employee in Paris.

Getting its 43,000 employees in more than 100 countries on the same network wasn't an easy task. Executive Gary Roberts, appointed by Ellison to head the project, quickly discovered that Oracle was an organizational mess.

"What we experienced was what every large company that invested in client/server experienced: Nothing but bloat, bloat, bloat," said Roberts, senior vice president of Oracle's global information technology group.

Oracle had thousands of computer servers of various types and sizes running thousands of databases around the world. The problem was that each department managed its own information about sales, marketing, human resources, financials and other data, and was totally disconnected from the hundreds of other cogs in the machine.

Indeed, Oracle had 1,500 technicians just working on maintaining the system, costing the company $600 million a year in technical support. "That was just craziness," Roberts said.

Oracle's inefficiencies were most apparent when workers around the globe tried to collaborate on projects.

To work together on a sales lead to a company with operations in Asia and the U.S., for example, a Redwood Shores-based sales person had to stay up late at night to catch a colleague in Bombay by phone. Then to exchange information, the salespeople would wait for faxed and express-delivered documents to cross the Pacific Ocean.

The result was a lot of wait, confusion and, sometimes, inaccuracy.

Now, Oracle said, its global employees can communicate with each other on-line, exchange documents and check the status of operations in any department throughout the company.

David Riley, an applications sales manager for Oracle in Waltham, Mass., said the time between meeting a new customer and closing a deal has shrunk since he started using Oracle's on-line sales software.

Currently, Riley is working on a sales lead to a multinational company with offices in the United Kingdom and Mexico. After each meeting and phone call with the company, he takes about 10 to 15 minutes to enter information about the company and the software it wants on a form that he accesses through the Web. Riley's colleagues abroad also retrieve and update information about the customers' needs in the overseas offices. Everyone can see the same information at any time, saving time and confusion.

"My sense is that I am generating more revenue per hour selling than I used to," Riley said. "I'm able to handle more opportunity and am more efficient in selling."

Revamping Oracle's internal network was radical and shows the kind of dislocation that can happen to workers.

The company is shutting down 38 global data centers around the globe, leaving just two in Redwood Shores, which act as ground zero for its internal network. And to consolidate all its in-house information on just a handful of servers, Oracle had to invest in more powerful and expensive machines.

It's been money well spent. Since "dot-comming" itself last June, the company has saved roughly $1 billion. Now, it's boosted the cost-cutting target to $2 billion this year.